Dubrovnik’s property ladder is missing the first rung

“Either you have a population of millionaires or magicians,” joked the international property expert sitting across the table from me. “Well we certainly aren’t millionaires, this is Dubrovnik not Monaco, and we aren’t magicians either,” I replied with a smile.

We were in the middle of a conversation about his professional subject and it was going pretty much as I had expected. “So how do young people get their first step on the property ladder,” he added. If I am not involved in a debate about tourism, then pretty much always the second topic on the list is real estate.

Firstly, the concept of the property ladder is almost non-existent in Dubrovnik. It works like this. When you are just starting out on your career you would take a mortgage for a small one-bedroom apartment for a very reasonable price. The first baby step on the ladder. As your career (and salary) develops you sell this (for a profit) and move onto a bigger place. Your original mortgage, which you keep but just transfer onto the new property, increases slightly but so has your salary. You are climbing the ladder. This same situation happens a couple more times until you have the home of your dreams, or at least that is the theory. It works well, most of my friends and family in the UK have followed the same path, unless property prices drop or you get fired.

So how the hell can a young family in Dubrovnik even get on the first step of this property ladder. They would need a ladder just to get on the ladder. I explained this to the real estate expert and again he asked “So how do young people, or any body for that matter, buy houses and apartments.” The simple answer is they don’t.

“Out of my group of friends and family here I think only a couple have actually bought their own property,” I answered.

I then dropped onto the table a copy of Jutarnji List with the property section open and the headline “Dubrovnik most expensive real estate in Croatia.” I could see he was thinking deeply as I translated the article. I shocked him even more as I explained the near impossibility of actually getting a mortgage and the fact that you basically sign away your life (and the lives of your loved ones) to the bank for 25 years. “Of course if you can actually afford the repayments, which most people, without winning the lottery or robbing the bank that is lending them the money, can’t,” I empathised. There is a premium to pay for living in Dubrovnik. And of course it isn’t a unique situation that one city is twice the price of the capital. However, the relation of local salaries and prices per square metre is so far apart that most people simply give up and those lucky ones how reach the first step on the ladder remain exactly where they are.

You’ve basically got to get on well with your parents for you can almost guarantee that you’ll be spending most of your life under the same roof.

“Now on the flipside local real estate agents will argue that there is a high demand for properties in Dubrovnik, mostly from foreign buyers, and that the market regulates the prices,” I offered as some way of an explanation. “If the market is buoyant then they are right, at least from their point of view which is to make money,” he replied. “But there has to be circulation on all levels for a community to be healthy and grow,” came his conclusion. He then lightened the mode by adding “The best time to buy a house is always five years ago.” We all know that Croatia has come a long way since independence but there is a hell of a long way still to go yet. Just ask Kolinda how pleased she is with the pace of movement on a governmental level. Things moved rapidly and then all of a sudden slowed to a snail-like speed.

Of course the “haves” are still living like gods whilst the “don’t have anywhere near as much” are loading up one credit card just to pay for the other three. For as John Paul Getty once famously said “If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.”